A sage wisdom

Inspiring Story for Youth

Inspiring Story for Youth

Woz" and Jobs - the two "Steves"

Apple's history starts with the story of two young and exceptional people who began building a computer in their garage and "launched the microcomputer revolution,") changing our daily life in many respects.

The Apple story is the story of the two "Steves". Stephen G. Wozniak was a typical Silicon Valley child. Born in 1950, he had grown up with the electronics industry in Silicon Valley, and had been intrigued by electronics from the start, since his father w as an electronics engineer. Wozniak, known to his friends as "Woz", was bright and was an electronics genius. At the age of 13, he won the highest award at a local science fair for his addition-subtraction machine. His electronics teacher at Homestead High School recognized Woz's outstanding talent and arranged a job for him at a local company, where Steve could work with computers once a week. It was there that Wozniak saw the capabilities of a computer (it was the DEC PDP-8 minicomputer) and studying the manual, it became his dream to have a computer of his own one day. He designed computers on paper. Many other students who grew up in Silicon Valley shared this dream.

In 1971, Wozniak built his first computer with his high-school friend Bill Fernandez. This computer (they called it Creme Soda Computer) was developed in his friend's garage and had "switches and lights just as the Altair would have more than three years l later.")

Bill introduced Woz to a friend of his named Steven P. Jobs. Jobs was born in 1955, and his foster parents were - unlike most other people in Silicon Valley - blue-collar workers. However, growing up in an environment full of electronics, Steve came in con tact with this fascinating technology and was caught by it.

Jobs was a loner and his character can be described as brash, very ambitious and unshakably self-confident. With his directness and his persistency he persuaded most people. He had the ability to convey his notions and vision to other people quite well. An d he was not afraid to talk to famous people and did never stop talking to them until they gave in and did what he wanted. His traits could already be observed in his adolescence, for instance when he - at the age of thirteen - called famous Bill Hewlett, president of HP, and asked him for spare parts he needed for his frequency counter.

Although Steve Jobs was five years younger than Wozniak, "the two got along at once." Apart from their common fascination with electronics, they "shared a certain intensity." Whereas Woz was intense in digging "deeper into an intellectual problem than anyo ne else," Jobs's intensity was in ambition. Moreover, both were genuine pranksters, and often they fooled others with their technical knowledge.)

When they heard of "phone-phreaking" - making free long-distance telephone calls with a device called "blue box" - the two started their first business venture, building those blue boxes.

In 1972, Steve Jobs went to Reed College in Oregon; however, there he became more interested in Eastern religions, dropped out a year later and returned to Silicon Valley, where he took a job with Atari (a young video game company) until he had saved enoug h money to go on a trip to India for some months. Then he went back to California and to his work at Atari.

After attending three different colleges, Wozniak had begun work for Hewlett-Packard in summer 1973. When Atari planned to develop a new game called "Breakout," Jobs boasted he could design it in only four days - quicker and better than anyone else. Jobs t old his friend Woz about it, and the two designed the game in record time, working four nights and days, and were paid the promised $700 for it. This experience showed them that they could work together on a tough project and succeed.

The first Apple


When the Homebrew Computer Club came into existence, Wozniak began attending its meetings. As he later would recall, Homebrew was a revelation for him and changed his life. He met people who "shared his love for computers") and learned from them as well a s he encouraged them with his technical expertise. Others brought along their Altairs, which Wozniak was interested in but could not afford. He realized this computer resembled the Creme Soda Computer he had built some time ago.

Soon after, Chuck Peddle at MOS Tech released his new 6502 microprocessor chip for only $20, which was a sensation compared to the usual price of $400 for those chips then. Suddenly, Woz saw his chance and decided to write the first BASIC for it, which was the most spread programming language. After finishing with the BASIC, he made a computer for it to run on. The other hobbyists at Homebrew were impressed by Wozniak's kit, which actually was a board with chips and interfaces for a keyboard and a video mon itor.

Steve Jobs saw the opportunity of this machine, which they named Apple, and finally persuaded Wozniak to start a company in April 1976. The two raised the money for the prototype model with a printed circuit board by selling Jobs' VW microbus and Wozniak's HP calculators. With the Apple I, Steve Wozniak had designed a "technological wonder") and made his dream of owning a computer come true. His friend Steve Jobs played the role of a salesman and his ambitious promotion made the Apple I "a star in the tigh t world of computer freaks.")

The breakthrough for the two Steves came in July, when Paul Terrell ordered 50 Apples for his Byte Shop, however on condition the computers were fully assembled in a case and equipped with a cassette interface to enable external data storage.

Jobs could "obtain net 30 days credit") for the parts they needed for their computer. Working hard in Jobs parents' garage, they managed to construct the 50 Apples within those 30 days.

The Apple I was continuously refined by Wozniak, and its sales made the young company known, partly because the company's name appeared on top of computer lists, which were published by electronics magazines in alphabetical order.

Building up the company


While the first Apple was being sold, Steve Wozniak had already begun work on another computer, the Apple II. This machine would have several special features which had not appeared in any microcomputer before and would make it "the milestone product that would usher in the age of the personal computer.")

Jobs and Wozniak sensed the market potential their new computer would have, but realized they did not have the necessary capital for constructing the machines. So they tried to sell their computer to several established companies such as Atari, HP and MOS Tech, which, however, rejected. Looking out for some venture capital to produce the new computers by themselves, Steve Jobs met with Mike Markkula, who had been a marketing manager at Fairchild and Intel.

Markkula was at the age of 38, but had already retired, since he had made a fortune of many million dollars by his stock option at Intel. He visited Jobs's garage and became interested in their project. Markkula, the former marketing wizard at Intel, thoug ht it "made sense to provide computing power to individuals in the home and workplace" and offered to help them "draw up a business plan.") Finally, he decided to join the two Steves. He offered $250,000 of his own money and his marketing expertise for on e third of the company, which was incorporated as Apple Computer in January 1977. Markkula's decision marked the turning point in Apple's history; he took care of the business side and arranged all the things necessary to create a successful company. Markk ula's know-how was crucial for Apple, since Woz and Jobs did not have any business expertise. This knowledge is very important for new firms. A lot of other start-ups in Silicon Valley failed as their founders were only engineers, who lost control over the ir enterprises when they could not meet the skyrocketing demand for their products.

In 1977, Markkula hired Mike Scott, who had worked for product marketing at Fairchild, as the company's president, because he felt Apple needed an experienced person to run the company.

Jobs, who wanted only the best for his company, also persuaded Regis McKenna, who ran the biggest and most influential agency in Silicon Valley, to do public relations and advertising for Apple. McKenna, who worked for successful Intel and many other compa nies, brought Apple legitimacy and, among other things, designed the famous Apple logo. Another important contribution was the fact that he made Apple the first company to advertise personal computers in consumer magazines to "get national attention" and " popularize this idea of low-cost computers.")

Steve Jobs's persistency had persuaded Wozniak, the electronics genius who designed the machine, McKenna, and Markkula, the business expert. Jobs himself was the driving force that brought the key components together to build up a successful company.

Apple II - starting the personal computer boom

In April 1977, the Apple II was introduced to the public at the Westcoast Computer Faire, where Apple had rented the largest booth just opposite the entrance. Wozniak's "technological wonder"⁾ was a great success and the first orders were already made. Th e Apple II was the "first true personal computer."⁾ It was the first microcomputer able to generate color graphics and the first with BASIC in ROM and included a keyboard, power supply and an attractive lightweight and beige plastic case, which would beco me standard for subsequent PCs. The Apple II was more sophisticated than any microcomputer before, and represented a machine which could be worked with effectively. Steve Wozniak had put all his "engineering savvy"⁾ into it, and had created a computer he would like to own.

The Apple II was given a rapturous welcome in the public. In 1977, the company sold more than 4,000 computers, which were priced at $1,300, and grew rapidly.

Programs and data for the Apple II were stored on cassette tapes. But this common way of storage turned out to be quite unreliable and awkward. Mike Markkula saw the future in floppy disks, which had been developed by IBM in the early 1970s, and asked Wozn iak to design a disk drive for the Apple II. Woz took the challenge and finished in record time (only one month). His final design was brilliant: he developed a new technique ("self-sync") and created the fastest minifloppy disk drive. It was shipped in Ju ne 1978 and proved vital for Apple's further growth. It made possible the development of serious software such as word processors and data base packages,"⁾ which increased the practical use of the computer decisively.

In 1979, Daniel Fylstra, a programmer from Boston, released VisiCalc for the Apple II. This spreadsheet was a novelty in computer software. It relieved business calculations considerably and could be used to do financial forecasting. It was the first appli cation that made personal computers a practical tool for people who do not know how to write their own programs. VisiCalc was very successful and contributed to the skyrocketing sales of the Apple II.

The same year, marketing wizard Mike Markkula made another important decision for Apple future growth. His idea was to create a new market in the field of education and schools. The Apple Education Foundation was established, which granted complete Apple s ystems equipped with learning software to schools. This market should account for a major part of the company's sales in the subsequent years, since Apple II soon became the most popular machine for students. 

Overnight millionaires - the American Dream becomes true

Apple II was a revolutionary product and "opened a new chapter in the history of data processing."⁾ Its introduction had an "earthshaking impact" and as the "best-selling computer of any size ever built"⁾ it boosted the company at an enormous speed. Star ting with sales of $775,000 in 1977, Apple reached $50 million two years later and sold more than 35,000 computers. The explosive growth continued, and in 1981, the company had already climbed up sales of $335 million. This rapid pace of expanding was real ly spectacular - even for a Silicon Valley start-up. Within only five years, Apple entered the Fortune 500 - the "fastest any firm had ever done that."⁾ From a garage based venture it had become the "fastest-growing company in American business history." ⁾

In 1980, Regis McKenna's public relations (PR) agency started an ad campaign in major newspapers to establish Apple as a serious company in the business world and to prepare the company's first public sale of stock at the end of the year.

In the "most oversubscribed initial public offering since Ford went public in the mid-1950s,"⁾ on December 12, 1980, Apple's 4.6 million public shares were sold within an hour. By the end of the day, the stock had jumped by $7 to $29. More than 40 people at Apple suddenly became millionaires. Steve Jobs, who held most of the stock, was worth $256.4 million (he was only 25 years old), Mike Markkula got $237 million (his second big score after Intel) and Steve Wozniak was $135.6 million rich. They became ove rnight millionaires - a phenomenon, which is characteristic for Silicon Valley.

Starting with a product developed by Wozniak's enthusiasm for electronics and constructed in a garage, Jobs had built up a successful company, which finally went public. This was a highlight in the young company's history. The two Steves had made it and re alized the American Dream. Looking at all those successful companies in Silicon Valley which made their founders overnight millionaires, however, one has to take into account that only 20 percent of all start-ups survive and can go public.

But if an entrepreneur fails and his firm goes bankrupt, he will get a second chance in Silicon Valley, and maybe then his start-up will succeed. Therefore, having witnessed a company's failure has some positive effects, because you will learn from your mi stakes and be more experienced at a new venture.

The foundation of a new high-tech firm is usually based on a special idea or a product, which seems to be demanded by the market. In the case of Apple it is the personal computer; or Intel which was started to produce semiconductor memory chips based on a new technique. Frequently, bright engineers leave their company, because their innovative idea was rejected by the management, and start a so-called spin-off (e.g. Fairchild, Intel). To build up the new company, entrepreneurs need capital. This financial b acking is vital for the new start-up and is provided by venture capitalists, who in turn receive a certain share of the company, and often give helpful advice to the new entrepreneurs. When this enterprise is successful and the company goes public after so me years, founders often find themselves as overnight millionaires and venture capitalists receive a very high yield on their invested capital (perhaps ten or hundred times as much). 

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